Cyprus company formation

Cyprus is the third largest island in the Mediterranean. Its population is approximately 900,000 of mainly Greek origin, with a smaller Turkish community. The capital is Nicosia and local time is 1 hour ahead of Central European Time. Official languages are Greek and Turkish but Greek and English are more widely spoken. Cyprus has been a member of the European Union since 1 May 2004 and adopted the Euro as its currency on 1 January 2008. The official body responsible for Cyprus company formation and the maintenance of company records is the Registrar of Companies.

Cyprus limited liability company

Legal system

The Cyprus legal system is based on English Common Law.

Governing legislation

Cyprus company formation is governed by the Companies Law of 1951, as amended.

Company activities

A Cyprus company may undertake any legal activity which does not require specific licensing, such as banking, insurance, financial activities or collective investment schemes. Depending on the company’s nature of activities, a licence to operate may be required from the Central Bank of Cyprus, the Superintendent of Insurance or other government bodies.

Cyprus company formation timeframe

You should allow 2 weeks for a Cyprus company formation to be completed but delays are frequently encountered with the Registrar of Companies. Shelf companies (whose names may be changed if required) are available and preferable if an urgent incorporation is needed.

Redomiciliation

If allowed by its articles of association, a Cyprus company may continue as a company registered in another jurisdiction. Similarly, a foreign company may become registered and continue in Cyprus if permitted by its own governing legislation.

Information held on public record

The company’s memorandum and articles of association, along with details of its issued capital, shareholders, directors, secretary, registered office address, registered mortgages and charges and copies of its financial statements are held by the Registrar of Companies and are available for public inspection.

Company name

The name of a Cyprus company may be in any language, provided it is expressed in Roman or Greek characters. Its limited liability status must be indicated using the word “Limited” or its abbreviation “Ltd” or the Greek equivalents of these terms.

Share capital

The share capital may be denominated in any currency, normally in Euros (€). At least one share must be issued at the time of the Cyprus company formation. Bearer shares are not allowed.

Shareholders

A Cyprus company must have at least one shareholder, who may be either a natural person or a body corporate. The use of nominee shareholders is possible.

Directors

At least one director must be appointed at the time of the Cyprus company formation, who may be either a natural person or another company. The directors may be resident anywhere in the world and professional directors are possible. Resident directors would be necessary for double tax treaty eligibility. The same person may be a sole director and shareholder provided another party acts as secretary.

Shareholder and director meetings

Meetings of the shareholders and the directors may be held anywhere in the world. An annual general meeting (AGM) of the shareholders must be held in each calendar year, with successive meetings not more than 15 months apart. The first AGM must take place within 18 months of the company’ s incorporation.

Registered office

A registered office must be maintained in Cyprus, where the company’s statutory registers and records and the seal will be kept.

Company secretary

A company secretary must be appointed, who may be a natural person or company. The secretary may be resident in any country but preferably in Cyprus. The same person may act as the company’s sole director and secretary provided the shares are held by a second party. Likewise, a sole shareholder and secretary is possible if another party is appointed as director.

Financial statements

All Cyprus companies are required to prepare annual financial statements which must be audited by a resident auditor (subject to very few exceptions).

Annual filing requirements

The company must file an annual return and financial statements with the Registrar of Companies. An annual tax return also needs to be submitted to the Commissioner of Taxation.

Taxation

The standard corporate tax rate is 12.5% levied on the company’s worldwide income. There is no capital gains tax unless the gains arise from the sale of real estate property located in Cyprus. Dividends paid to non-resident shareholders are not subject to withholding tax.

Double tax treaties

Cyprus tax resident companies can benefit from over 30 double tax treaties which have been concluded by Cyprus, notably with a number of countries in Central and Eastern Europe, the Middle East, Russia, India, South Africa and numerous others.

Other considerations

Depending on the nature of its business activities, a Cyprus company may be required to register for VAT or allowed to do so voluntarily. The maximum rate of VAT is 19%.